State Farm Property Exam Questions And Correct Answers With Rationales.

State Farm Property Exam Questions And Correct
Answers With Rationales.




State Farm Property Exam – Questions 1–30



Question 1

Which of the following best describes a dwelling policy (DP)?

A. Provides coverage for residential buildings and sometimes detached structures
B. Covers only personal belongings
C. Automatically includes liability
D. Only for renters

Correct Answer: A

Rationale:
Dwelling policies focus on protecting the physical structure, with personal property often requiring
separate coverage.



Question 2

Which of the following is true about homeowners insurance (HO-3)?

A. Provides open-peril coverage on the dwelling and named-peril coverage on personal property
B. Only covers fire damage
C. Excludes liability
D. Only applies to rental units

Correct Answer: A

Rationale:
HO-3 policies offer broad coverage for the dwelling and selected coverage for personal property,
making them standard for homeowners.



Question 3

Which of the following best describes a peril?

,A. A specific cause of loss, such as fire or theft
B. A deductible
C. A type of policy
D. Only applies to commercial property

Correct Answer: A

Rationale:
Perils are the events that cause damage, which insurance coverage addresses.



Question 4

Which of the following is true about named-peril policies?

A. Cover only perils explicitly listed in the policy
B. Cover all risks unless excluded
C. Automatically include liability
D. Only for renters

Correct Answer: A

Rationale:
Named-peril policies limit coverage to specified events, unlike open-peril policies.



Question 5

Which of the following is true about open-peril (all-risk) coverage?

A. Covers all risks except those specifically excluded
B. Only covers listed perils
C. Excludes dwelling structures
D. Optional for renters only

Correct Answer: A

Rationale:
Open-peril coverage provides broader protection, shifting the burden of proof to the insurer for
excluded risks.



Question 6

Which of the following is true regarding homeowners liability coverage?

A. Pays for bodily injury or property damage caused by the insured
B. Covers only the insured’s home
C. Optional for all homeowners
D. Only applies to theft

Correct Answer: A

, Rationale:
Liability coverage protects the insured against lawsuits and claims from third parties.



Question 7

Which of the following is true about personal property coverage?

A. Covers insured’s belongings against named perils or open perils, depending on policy
B. Covers only furniture
C. Always includes off-premises items
D. Optional only for commercial policies

Correct Answer: A

Rationale:
Personal property coverage protects items inside and sometimes outside the home, depending on
the policy terms.



Question 8

Which of the following is true regarding additional living expenses (ALE)?

A. Pays extra costs to maintain living standards if home is uninhabitable due to covered loss
B. Only covers food
C. Covers liability claims
D. Optional only for renters

Correct Answer: A

Rationale:
ALE ensures the insured can maintain normal living standards during repairs.



Question 9

Which of the following is true about deductibles?

A. Amount the insured must pay before coverage applies
B. Premium paid monthly
C. Maximum claim payout
D. Optional for homeowners

Correct Answer: A

Rationale:
Deductibles reduce minor claim frequency and share loss responsibility with the insured.



Question 10

Which of the following is true about policy limits?